Settlement with Volkswagen for Emissions Defeat Devices (2016)

Settlement of consumer protection claims raised by a multi-state coalition of state attorneys general against Volkswagen for selling vehicles equipped with “defeat device” software intended to circumvent emissions standards and concealing this software from regulators and the public.

Summary: A multi-state coalition of state attorneys general conducted an investigation that revealed Volkswagen had sold more than 570,000 vehcles in the U.S. equipped with “defeat device” software used to circumvent applicable federal and state emissions standards (specifically, for NOx). Volkswagen also marketed its vehicles as environmentally friendly and in compliance with federal and state standards. Many states filed lawsuits alleging violations of consumer protection and environmental laws. The federal government also sued.

In 2016, Volkswagen finalized settlement agreements with with 43 states and the federal government. Under the settlements, Volkswagen is required to:

Pay $2.7 billion into a trust to support environmental programs throughout the country to reduce emissions of NOx.

Pay to the states more than $1,000 per car for repeated violations of state consumer protection laws, amounting to $570 million nationwide.

Implement a restitution and recall program for more than 475,000 vehicle owners, whereby these owners will receive restitution payment of at least $5,100 and a choice between a buy back of the vehicle or a modification to reduce NOx emissions.

Invest $2 billion over the next 10 years for the development of non-polluting cars, or zero emission vehicles, and supporting infrastructure.

Pay $20 million to the states for their costs in investigating this matter and to establish a fund that state attorneys general can utilize for future training and initiatives, including investigations concerning emissions violations, automobile compliance, and consumer protection.

The states participating in the settlements retained the right to seek additional penalties from Volkswagen for violation of state environmental and emissions laws.

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